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Biggest Reform EVER passed thread

tiltdeac said:
Corker is somehow now a yes, despite recently saying “If it looks to me like we’re adding one penny to the deficit, I am not going to be for it.” Probably helps that the pass through deduction changes will save him a truckload.

So it doesn't even matter if Collins flips at this point.
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“If it looks like to me, Chuck, that we are adding one penny to the deficit, I’m not going to be for it. Sorry, it is the greatest threat to our nation,” Corker said.
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Hypocrites, the lot of them.
 
ChrisL68 said:
My response to this is.........so what?

That money does no good being restricted to being invested in T-bonds, and nobody to the right of crazy Bernie thinks this should be taxed at 35% because it would kill US competitiveness overseas. US multinationals would start going bye bye.

Say they give the money to their shareholders in dividends? Then the shareholders will pay ~20% of it in taxes to the government(s) and the other 80% will be available to invest in other investments, or to spend in the economy.

If they buyback stock, then it will create a capital gain for the shareholder and will be back in the economy.

Free flow of money is a good thing. That's why Obama was proposing something similar. His rates were higher but the principles were similar on the corporate side.
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It's great for shareholders, sure, I don't think anyone was ever arguing otherwise. It's more the GOP argument that that most of the money from these cuts will flow down to workers, most of whom are not shareholders, that is pretty clearly bullshit. But they claim it anyway because they want to pretend the corporate cut is primarily for the middle class.

Edited to add that ~35% of stock in American corporations is owned by foreign investors.
 
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ChrisL68 said:
My response to this is.........so what?

That money does no good being restricted to being invested in T-bonds, and nobody to the right of crazy Bernie thinks this should be taxed at 35% because it would kill US competitiveness overseas. US multinationals would start going bye bye.

Say they give the money to their shareholders in dividends? Then the shareholders will pay ~20% of it in taxes to the government(s) and the other 80% will be available to invest in other investments, or to spend in the economy.

If they buyback stock, then it will create a capital gain for the shareholder and will be back in the economy.

Free flow of money is a good thing. That's why Obama was proposing something similar. His rates were higher but the principles were similar on the corporate side.
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Economic nationalism!
 
ChrisL68 said:
She doesn't know what she is talking about. This will actually increase the international portion of taxes of companies that set up no tax intangible deferral schemes. And they were never repatriating that money anyway.
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A bunch of seemingly smart people are saying similar things to palma's article. Curious to hear your thoughts.

For example

In the future, corporations would be required to pay about a 10 percent minimum tax on overseas income above a certain level. The provision is billed as a way to discourage the movement of jobs and profit overseas. But the fine print of the new global minimum tax would make the problem worse, several tax specialists said.


“The overall effects of this are going to be unambiguously bad for the workers that it’s ostensibly designed to help,” Clausing said.

There are three reasons, according to nonpartisan tax experts. First, a corporation would pay that global minimum tax only on profit above a “routine” rate of return on the tangible assets — such as factories — it has overseas. So the more equipment a corporation has in other countries, the more tax-free income it can earn. The legislation thus offers corporations “a perverse incentive” to shift assembly lines abroad, said Steve Rosenthal of the Tax Policy Center.

Second, the bill sets the “routine” return at 10 percent — far more generous than would typically be the case. Such allowances are normally fixed a couple of percentage points above risk-free Treasury yields, which are currently around 2.4 percent.

As a result, a U.S. corporation that builds a $100 million plant in another country and makes a foreign profit of $20 million would pay roughly $1 million in tax versus $4 million on the same profit if earned in the United States, said Rosenthal, who has been a tax lawyer for 25 years and drafted tax legislation as a staffer for the Joint Committee on Taxation.

Finally, the minimum levy would be calculated on a global average rather than for individual countries where a corporation operates. So a U.S. multinational could lower its tax bill by shifting profit from U.S. locations to tax havens such as the Cayman Islands.
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https://www.washingtonpost.com/busi...a_story.html?tid=sm_tw&utm_term=.bb6855e4885a
 
tiltdeac said:
Corker is somehow now a yes, despite recently saying “If it looks to me like we’re adding one penny to the deficit, I am not going to be for it.” Probably helps that the pass through deduction changes will save him a truckload.
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I'm most interested in how this is all going to affect the real estate market. Prices may come down as the incentive to own versus rent is less. Or prices stay the same and rents go up. Or prices skyrocket because owning rental property is that much more attractive, so investors will be more incentivized to own real estate.

It could go a myriad of ways, and I have no idea which way it can go.
 
And there’s this—admittedly wonkish analysis from Krugman

Quote
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...So using the very logic that seems to underlie optimism about corporate tax cuts, we actually end up with much smaller numbers for national income.

And wait, there’s more. Even in the long run, the U.S. doesn’t face a horizontal supply of capital, because we’re a big player and capital mobility is far from perfect. We definitely don’t face a horizontal supply curve in the short and medium run. As a result, a lot of corporate tax cuts will raise after-tax profits rather than wages. And roughly a third of this profit rise will accrue to foreign investors who are already here. That’s a loss for America’s GNP – the red rectangle at the bottom — that partially or maybe even completely offsets the gain from the wedge.

My main point, however, is that we should think about corporate tax cuts the way we think about other economic policies: the gains come from reducing existing distortions. In this case, the distortion is a tax that puts a wedge between domestic returns and the cost of imported capital. If you take the logic of the case for gains from corporate tax cuts seriously, it still implies that only the narrowing of the wedge produces gains – and that means that only a smallish fraction of the gains in GDP, however large they may (or may not) be, actually stays here.
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WakeForestRanger said:
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I hope the Dems are busy calculating how much money each Republican member of Congress running for reelection in 2018 is going to make off this bill. (Doesn't apply to Corker obviously, which is a shame because the whole idea that he refused to vote for a tax bill that adds $1.5 trillion to the deficit until it became more profitable for him personally would be useful.)

IBT previously reported that 13 GOP lawmakers directly sculpting the bill —including U.S. House Speaker Paul Ryan — have between $36 million and $163 million worth of ownership stakes in real estate-related LLCs. Those entities generated between $2.6 million and $16 million in “pass through” income and could benefit from the new provision.

Sen. Bob Corker, who was considered a potential “no” vote on the bill, abruptly switched his position upon the release of the final legislation. Federal records reviewed by IBT show that Corker has millions of dollars of ownership stakes in real-estate related LLCs that could also benefit.
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tiltdeac said:
A bunch of seemingly smart people are saying similar things to palma's article. Curious to hear your thoughts.

For example



https://www.washingtonpost.com/busi...a_story.html?tid=sm_tw&utm_term=.bb6855e4885a
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The entire intention of this base erosion method is to keep companies from setting up intangibles to shift income to tax haven jurisdictions. Legitimate operations in countries has never been the key to base erosion concerns because that is a brick and mortar investment in the local marketplace.

Looking at the return on tangible income producing assets, the company I work for (mature manufacturer) would be able to shield about 3% of its net income in this fashion. Apple looked about the same looking at its 10-k. I would like to see the numbers indicating that large multis are shielding large amounts of income from taxation using tangible asset investment.

Not really sure what they meant by the Cayman Islands income. nobody is putting up manufacturing plants in the Cayman Islands. I would bet that most overseas operations are in countries with tax rates around 20%. So even under the traditional FTC deferral regime, they wouldn't be paying any US tax on the repatriation.

I am a democrat. I realized the need to lower corporate tax rates, but I wouldn't have been quite as favorable as this tax bill. I would have been closer to revenue neutral while still lowering the rates and providing an incentive to enact the free flow of capital. In the end, many of the mainstream principles or democratic corporate tax reform were similar but with higher numbers.

I do think this system can easily be adjusted to increase revenues in the future where our deferral mechanism was a non-starter.

So in some ways, this will be like Obamacare. An imperfect first step on the road to where we want to be.
 
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Am hearing there may have been a last minute change to the pass through laws which no longer penalize some service companies, but I haven't been able to find anything on it.
 
20% pass through deduction.

There are wage and service business limtiations, but they only apply to taxpayers single over $157,500 taxble income or MFJ $315,000 taxable income. Then they start to get phased out under wage limit and service limitations.
 
palmab03 said:
Am hearing there may have been a last minute change to the pass through laws which no longer penalize some service companies, but I haven't been able to find anything on it.
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Page 562 of the bill

"the definition is modified to exclude engineering and architectural services"

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Rep. Tom Cole doesn't trust the economists on GOP tax plan: 'There are about as many economists as there are opinions.'

He says the bill could help blue-collar families more by cutting payroll taxes for low earners and raising them for higher earners in a "stairstep" pattern. He decries the survival of the "carried interest" tax break benefiting affluent hedge-fund managers, among others, a tax break he has opposed for years.

"It just seems wrong," Cole says. "We'd be better off if there were more populist victories in there."

Yet those objections don't shake Cole's determination to vote "yes." He cites cues he has received from two mutually reinforcing sources.

One is record-setting stock prices. "I'm in the stock market," he explains, "and I've sitting here watching the collective judgment of the business community."

The other is colleagues on the tax-writing committee. Republicans there "tend to have more the mindset of Wall Street and the financial community," he observes, and "they've done their homework."
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WakeForestRanger said:
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avalon said:

He appears to have been caught with his hand in the cookie jar.
 
 
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